Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.9% to close under $1,054, its lowest finish since February 2010, after strong payrolls data and hawkish comments by Fed Chair Janet Yellen raised the likelihood of a rate increase this month.

ADP reported private payrolls added 217,000 jobs in November, the most in five months, suggesting that the labor market is returning to good health. Slow job growth has been a main reason for the Fed's reticence to tighten monetary policy in recent months. If Friday's nonfarm payrolls report shows similar strength, it will all but remove a major impediment to a December hike.

Fed Chair Janet Yellen telegraphed that she is ready to support the first rate hike since 2006 when the FOMC meets in two weeks. Without explicitly endorsing a December hike, she told the Economic Club in Washington today that the economy is on track to support additional job gains and higher long-term inflation, the Fed's main requirements for higher rates. Yellen cautioned against waiting too long because it could cause the central bank to tighten "abruptly."

Speaking today in Florida, Dennis Lockhart of the Atlanta Fed also sounded onboard for December, declaring that "the case for liftoff is compelling" unless a wave of new data "drastically changes the economic picture" in the next few weeks.

The dollar rose to a seven-month high against the euro and pound following Yellen's speech as traders positioned themselves for divergent monetary policies on the two sides of the Atlantic. The ECB is expected to announce more "aggressive" easing when it meets later this week. A stronger dollar weighs on gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies.

The other precious metals were also lower, with silver sliding 0.5% while platinum and palladium dropped 0.4% and 2.5%, respectively.

At the Comex close: February gold fell $9.70 to $1,053.80; March silver dropped more than 7 cents to $14.01; January platinum slipped $3 to $832.40; and March palladium lost $13.40 to $525.80 an ounce.